Steve Jobs has posted an open letter entitled "Thoughts on Music" on the Apple website and, in doing so, joins Yahoo! Music in calling upon the major record labels to abandon DRM for online music sales. He rightly points out that while 90% of music sales are on CD's without DRM, the growth of online music sales is inhibited by the saddling of electronically distributes music with consumer unfriendly DRM. In his open letter Steve discusses the status quo, the problems associated with licensing its "FairPlay" DRM system and, ultimately, concludes that DRM-free music sales is the best way forward.

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.

Dale's Comment: There have been countless articles on this topic over the last few weeks. This Wired article is as good as any other. It presents a nice summary of the reasons why the major labels may abandon DRM in favor of MP3 music distribution. This article falls into the category of "I'll believe it when I see it", but I do see it as an inevitability. I just don't see it happening as quickly as the recent optimistic bloggers do. But I'd be happy to be proven wrong.

For years I have called for video-download services to be provided directly to a TV-connected consumer electronics product such as the Xbox, TiVo or PS3. This Variety article discusses how the Xbox 360's new Internet-based video-on-demand service is having relative success (where others have failed) due to its available HD content and its direct connection to the TV.

The relative success of video downloads on Microsoft's Xbox Live and disappointment of Amazon.com's Unbox point to two factors that differentiate Xbox from Amazon and its many other competitors — consumers who download a movie want a simple way to watch it on their TV, and those with high-def TVs want high-def content.

A primary reason for its success lies also in the fact that DRM is not a relevant consideration for most users when the content is delivered directly to the display unit of choice. iVOD services to PCs have largely failed because most people do not want to watch TV and movies on their computers. And the DRM used by most of those services preclude users from copying the movie onto a DVD for playback where they want to watch them – in the living room.

FYI: Joystiq has a pretty good preview of the system here including a YouTube demo. Note that the demo was done early-on. As I understand it the slow-downloads and other glitches experienced in the early days have been resolved.

Dale's Comment: Each of these articles make the same essential point. Piracy of video content is pervasive because it provides consumers with a product they want – a vast selection of high quality content, meeting the tastes of both the masses and the long tail – with the ability to use/view the content on any device and with any software/service of their choosing. Something the TV and movie-industries fail to provide to the very consumers eager to purchase it from them – if only it was conveniently available at fair prices and under fair use terms.

This oft-quoted remark by Disney co-chair Ann Sweeney made at a conference in October, shows at least that the industry is finally starting to grapple with the issue:

"We understand now that piracy is a business model. It exists to serve a need in the market for consumers who want TV content on demand. Pirates compete the same way we do – through quality, price and availability. We we don?t like the model but we realise it?s competitive enough to make it a major competitor going forward."

Online music seller eMusic is second only to DRM-laden iTunes for legitimate online music sales. Most of its library of 2 million songs comes from independent labels. It's success proves that consumers are more than willing to pay fair prices for DRM-free music. While it took the eMusic two years to sell its first 50 million songs, it has taken less than a year to sell the next 50 million.

Dales Comment: While I applaud eMusic, it too has a business model that I don't like. While individual songs can be purchased, their business model requires the user to pay a minimal subscription fee every month. Song purchases are deducted from the monthly fee. If you spend more than the fee, then you have to pay extra. My perfect world of music sales is to buy DRM-free songs with no minimum monthly commitment. I would be able to buy as many or as few as I want. Frankly, I'd like eMusic service to mimic that of AllofMP3.com's. Charge a fair per song price, allow me to purchase whatever I want in whatever format I want. That is a service I'd use!

This is a terrific Business 2.0 article (linked inot a CNN Money.com story) identifying why YouTube and Google are not the subject of as many copyright infringement lawsuits as had been predicted. Namely, Big Media is finding that YouTube can be a net postitive to their ratings and bottom lines.

AllofMP3.com does not seem like it is willing to go silently into the night.

In response to Visa's and Mastercard's cessation of services to the site, AllofMP3 now uses a prepaid credit proxy, Xrost,which can, in turn, be paid by Visa or Mastercard (See AllofMP3's payment page as explained here).

This recent TechWeb article explains that the payment process is not exactly easy. Only the most determined are likely to work their way through the payment maze. See also this Wired Blog description of the process. Incidentally the Wired Blog claim about the "complete legality" of music downloading in Canada is nonsense (see my blog entry on the topic if interested)!

On another note, AllofMP3 has engaged a New York-based intellectual property attorney, John Kheit of Chadbourne & Parke, LLP. as a U.S.-based spokesperson, advocate and PR person. In a recent panel discussion Kheit asserted that AllofMP3 has not broken any laws, that it operates legally in Russia and pays 15% of all music sales to Russia's equivalent of the RIAA, the Russian Organization for Multimedia and Digital Systems (ROMS). Kheit claims that foreign rights holders could petition ROMS for payment but that record labels have specifically not requested such payments in fear of legitimizing AllofMP3.

The RIAA's response is that ROMS has no authority to issue licenses to AllofMP3 and that AllofMP3.com would require licenses from record companies to legally sell downloadable music – which it does not have.

Under the U.S/Russian agreement, Russia has until June 1, 2007 to modify its laws and clarify that such activity is illegal. Until it does AllofMP3.com can continue as is. AllofMP3.com says it will comply with any new laws put in place by Moscow.

Amidst the music industry's growing angst over Apple's lock on the downloadable music market, EMI's Blue Note division is experimenting with DRM-free music downloads of Norah Jones new single "Thinking About You" for 99¢ U.S.Yahoo! is also making two DRM-free songs by Christian performer Reliant K. available. The prior Jessica Simpson song sold in MP3 or WMA format back in July, without DRM, for 1.99¢ U.S. No sales figures were announced.

“Content owners believe that digital rights management will protect them from being widely copied. At this point any company that embraces DRM is doing it emotionally or politically, there is absolutely no data to support that it has ever made a difference. It’s not a business issue.”

Dale's Comment: The song is also available, encumbered by AAC-DRM as usual for 99¢ from iTunes. Which would you prefer to buy? It would be really interesting to get a summary of DRM-encumbered sales from iTunes vs. DRM-free sales if the same song through Yahoo!

The very fact that these DRM-free sales experiments are continuing is a positive sign of things to come.

DRM-Free Song SNAFUs Continue: When I tried to purchase the DRM-Free Jessica Simpson song last July, Yahoo! would not sell it to me because I lived in Canada. This time, when I tried to buy the Norah Jones song (available here), it wouldn't allow me to just purchase and download the song in MP3 format as AllofMP3.com allows. It forces You to first install the Yahoo! Music Jukebox. Something that is anathema to DRM-free music if you ask me. But, I soldiered on intending to de-install the jukebox software after purchasing the song.

it was not to be. When I tried to install the player, Windows XP SP2's "Data Execution Prevention" software wouldn't let me – I tried to except-out the Jukebox from the DEP protection but it refused to budge. I even tried rebooting my system twice after excepting the jukebox software from DEP protection – no go. I enjoy Norah Jones music and would love to buy the song without DRM but the DRM Gods are conspiring against me! Argh!!!

I ask anyone reading this, if you enjoy Norah Jones or Reliant K's music, if you don't mind using the Yahoo! jukebox software and you can successfully install it, to please purchase a copy of this DRM song so we can get the industry ball finally rolling in a consumer friendly direction!

TiVo's Director of Broadband Services, Evan Young, gave this interesting keynote address to the Streaming Media West 2006 conference. I learned a few new things about TiVo's nascent TiVoCast service and I am concerned with the seemingly walled-garden-only approach TiVo seems to be going with the TiVoCast service.

Dale's Comment: I was quite stoked about this announcement. I'd love to learn some new Halo 2 moves from Fatal1ty. That is, until I got to the fine print. Apparently CBS will only show snippets of actual game play because the content of the competitions are too violent for prime-time television. How crazy is this!? While I gather getting network coverage IS a step forward, this is the same-old, same-old network thinking! Who would want to watch something called the "World Series of Video Games" without being able to watch the actual competitions in their entirety! Clearly network TV is not the right venue for this. This will have to head on over to cable in order for it to be successful in the long term.

Morgan Freeman's production company is in a new venture with Intel called ClickStar to launch independent films on the Internet within weeks of their theatrical debut. The first such movie to be distributed through ClickStar is Freeman's newest film, 10 Items or Less. It will be available online on December 15 – two weeks after its cinematic debut. Clickstar's next first-run digital release will be the upcoming John Travolta/James Gandolfini film, Lonely Hearts, next spring. The service will also make older feature films available for download.

Freeman and company would have launched 10 Items or Less on the Internet on the same day and date as in the cinema but this would have disqualified them for Oscar consideration. Apparently a two week delay gets them over this Oscar hurdle. Prices will range from US$1.99 for renting an older movie to around US$24.99 for buying a DVD-quality download of a first-run film.

Dale's Comment: As a movie fan, I look forward to this new form of movie distribution becoming ubiquitous. Distribution through the net, on the same day, or close to the same day, as cinematic releases, and easily viewable on the consumer's living-room TV – this is a winning formula!

Despite protests from the National Association of Theater Owners (NATO) and the ever-present "we've always done it another way" Big Media opposition, this form of distribution is, in my opinion, a fait-accompli. It's just a matter of time.

How it Works: This USA Today article has the best description I've found online of how the system will work. Given that this is a partnership with Intel, my fear was that this would be some kind of proprietary set-top device like Disney's ill-fated MovieBeam. Happily, it will be a Media Center PC-based service. Anyone with a Media Center PC should be able to download the service's content. Media Center will be built into the higher-end versions of Microsoft's Vista operating system due out next January. All such Media Center content can be viewed in the living room on the consumer's TV through an Xbox or Xbox 360 connected to the PC via an inhome network.

Hopefully this service will not remain proprietary to the Microsoft Media Center platform. Ideally ClickStar will also partner with TiVo, Apple and Sony for distribution through TiVos, Apple's forthcoming iTV device and/or the PS3 as well. And hopefully this will not be yet another U.S.-only service so that those of us in the movie-loving diaspora can be part of the fun too!

UPDATE: Since I've been asked this question more than once I'd like to clarify. You won't need to own a Media Center PC to use this service after January 2007. The higher-end versions of Vista (specifically the Home Premium and the Ultimate editions) will have the Media Center functionality built in. So, any PC that can run the higher-end Vista Operating Systems should be able to drive this system – assuming you upgrade your PC to one of the higher-end Vista O/S versions.

ars technica and others are reporting that AllofMP3 says it will not be shut down. Instead it says Russia agreed to certain copyright reforms that AllofMP3.com says it will comply with. Even if this is true, AllofMP3 could never be what it was. If the reported agreement is implemented by Russia, any new AllofMP3.com would be as close to its current incarnation as today's Napster is to its original form.

Dale's Comment: This is a sad day of sorts. While the legality of AllofMP3 was always murky, its success (second in world-wide sales only to iTunes) was a clear example of the fact that consumers are willing to pay a fair price for music from a site that services the users needs, if they are given fair rights to use the music they purchase. In the case of AllofMP3.com the user could chose the format they wished to purchase and there were no restrictions on the use they could make of the music. I look forward to the day the major labels learn this lesson and start offering DRM-free music for sale to honest users under fair terms.

DRM as we know it is over. There may be Son of DRM but that’s another matter. Right now its dead, the majors are moving towards the new model. The one thing you can be sure of is they will still be at the centre of the world music industry whatever happens. The independents are another matter. As our sector’s share has fallen by almost half in just over twelve months, the new model for us is partnership. It always was, I’m just not sure we got it.

The ifpi is Europe's version of the RIAA. This from the man who, on the ifpi's website, is quoted as saying:

"I hate what's happening with illegal downloading. People who love music shouldn't do this. The music industry provides huge choice. By stealing music you deny other people that choice in the future. Some may say it does not affect new and eclectic music. The fact is that it is precisely this kind of music which gets displaced. For small businesses it's particularly tough. Most of us came into this business not to get rich but because we love music. No one who loves music would steal it."

Later in the comments portion of the blog post Mr. Birch confirmed he made this statement but qualifies it as a prediction based on rumblings at board meetings – rather than known fact.

Dale's Comment: If Mr. Birch is quoted accurately and his predictions are true, much of my work here would be done. Ha! I'll believe it when I see it!

This one doesn't surprise me. It is more of the same – big media bites off its nose to spite its face by bringing lawsuits against any new business model that they don't sanction. In this case, Boston's Load 'N Go offers a service to their DVD-purchasing customers, by copying their purchased movie onto an iPod. You would think Paramount would appreciate vendors adding value for customers buying Paramount's products. But no, they choose to sue, presumably to force honest purchasers to purchase the movie twice, once on DVD and again as a download. The DMCA makes such copying, even for what otherwise would be fair use, illegal. So, thanks to the DMCA, Paramount seems to have a case. Chalk another one up for Paramount and another loss for honest consumers. This is precisely the thing that drives honest consumers to BitTorrent.

[Nov 29 Update: No doubt Paramount wishes to do what Warner Bros is now doing with videos sold at Walmart. According to CNN, Techcrunch and others, if you buy Warner's “Superman Returns” at Wal-Mart, you can pay an additional $1.97 to play it on portable devices, $2.97 more to play it on PCs or laptops, or $3.97 to play it on either portable devices or PCs/laptops. Ah, the old Big Media nickel and diming profit strategy. Don't you love it!]

[Nov 30 Update: Ha! It appears the EFF has come to the same conclusion – I wonder if they read my blog before writing this.]

As you can see from the "Related Posts" links, below I have blogged about YouTube's copyright liability in the past. It seems like the deep-pockets behind YouTube's new parent, Google, have brought out the copyright infringement vultures, and those that wish to speculate on the future (or demise) of YouTube specifically and copyright infringement on the Internet generally. The stories linked-to below are only a few of the avalanche of stories and blog posts on this topic over the last week.

Faced with an increased level of DMCA take-down notices, YouTube is busily working on taking down 10's of thousands of copyrighted works as requested by media owners. It's a difficult chore. Some 60,000 new videos are posted on YouTube every day. Offending materials are often put back up as soon as they are taken down.

YouTube says it will take a tough action to avoid such problems in the future and has committed to developing and deploying technology that can sniff out copyrighted video clips and bits of music. YouTube will also provide "copyright owners with user identification information" of users that post infringing content – after receiving a valid subpoena (See this CNet article).

While there may be some bumps and no doubt many legal hurdles and lawsuits along the way, if I were a betting man, I'd bet that YouTube will survive all legal challenges in-tact. This is a new and emerging area of the law. The DMCA provides the s. 512(c) safe harbour for this (the take-down scheme). YouTube is complying with its take-down obligations under the DMCA and similar laws around the globe.

More interestingly, YouTube's 10 minute video clip limit can dovetail with the self-interest of Big Media – those most likely to sue, and have the resources need to sue, Google. After initially fighting with YouTube over the posting of this Natalie Portman skit on Saturday Night Live, in the face of a furor from Internet bloggers, NBC backed-off, and allowed the post to remain on YouTube for awhile. NBC discovered that YouTube was a terrific way to promote its show as new and hip to a coveted younger demographic. Ahhhhhhhhh —- self interest (with strong lobbyists) … wins every time!

Both Visa and Mastercard have announced that it has stopped accepting transactions from AllofMP3.com, the Moscow-based, deep-discount, comprehensive music download service. It is the second most-used music download site on the Internet. It is popular because users can purchases songs how they want, in whatever format and bitrate they want without use-limiting DRM.

Mastercard justified this action by saying they do not "tolerate the use of its network for illegal activity." AllofMP3's notes that what it does is not illegal in Russia – and so far the Russian courts have upheld this view.

"The company believes the action taken by the world’s largest payment processors is arbitrary, capricious and discriminatory because Visa and MasterCard lack the authority to adjudicate the legality of AllofMP3’s activities and its determination that the company’s activities were illegal is patently erroneous and without legal merit. AllofMP3 has not been found by any court in the world to be in violation of any law."

"It is evident that Visa and MasterCard made the decision on factors other than legal grounds since the decision was not based on an adjudicated verdict by any court in the Russian Federation or, for that matter, anywhere in the world. To disqualify AllofMP3 based on a payment processing company’s whim is irresponsible and sets a bad precedence."

AllofMP3's immediate response was to start giving away music free to all-comers. It is considering talking legal action against the credit card companies. Some reports have said that it is considering moving to an all-advertising business model.

Dale's Comment: Despite the many actions of governments and courts around the globe, this is clearly the first real nail in AllofMP3.com's coffin. The major labels should establish a virtually identical service and charge up to ten times the price AllofMP3 charges and honest users like me would flock to their service. AllofMP3.com fills a critical need for honest music purchasers – a service where songs can be purchased where the user is not restricted as to the player she wishes to play the music on nor is she limited to the number and type of devices and services she can play her music on.

Yahoo! is the proper exclamation for this event. On July 20, 2006, Yahoo! and Epic released the first single by a major U.S. label without DRM, Jessica Simpson's "A Public Affair" for $2.00 U.S. Now, Yahoo! and Hollywood Records are set to distribute an entire album, Jesse McCartney's "Right Where You Want Me" without DRM in MP3 or WMA format for $9.99 U.S.

Dale's Comment: These may seem to be baby steps. But for an industry content with suing tens of thousands of its customers rather than providing them with a fair and convenient way to purchase music online, this could be the beginning of something bigger.

In response to Netflix’s patent infringement lawsuit launched against Blockbuster last April, Blockbuster filed an anti-trust counter suit against Netflix. Netflix asked the court to dismiss the counter suit, split the suits in two and/or postpone discovery on the second until the first was resolved. U.S. District Judge William Alsup rejected all three motions.

Back on May 9 I reported that the Free Peers had settled with the RIAA for $30M, shut down its BearShare P2P service and sold the BearShare assets to iMesh owner Musiclab. As it turns out, like Kazza before it, iMesh is re-introducing a new version of Bearshare (version 6 – currently in beta). BearShare 6 includes a “ToGo” portable music subscription, compatible with Windows Plays for Sure portable music players, as well as social networking features. The service will not be compatible with iTunes, iPods or the forthcoming Zune service from Microsoft. Subscribers will have access to 15 million songs, including 2.5 million from major labels. It will start with a free 30-day beta trial and eventually start charging a monthly fee.

To a melody quite reminiscent of "We are the World" (hum… any copyright violations there?), the irreverent Weird Al Yankovic has come out with a new single entitled: "Don't Download this Song" and promptly makes it available for download without any DRM/TPM restrictions. Some choice lyrics:

"Cause you'll start out stealing songs, but then you're robbing liquor stores and selling crack and running over school kids with your car"

"It doesn’t matter if you’re a grandma or a seven year-old girl, they’ll treat you like the evil, hard bitten criminal scum you are."

"As you know, we've been publicly trying to convince record labels that they should be selling MP3s for a while now. Our position is simple: DRM doesn't add any value for the artist, label (who are selling DRM-free music every day — the compact disc) or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform."

Dale's Comment: Let's hope this is the first step toward Yahoo's convincing the music industry to eventually sell all digital music without anti-copy restrictions. Out of principle alone, I will purchase this song (site unheard) from Yahoo! if they make it available for sale in Canada.

Update: So much for my first attempt to legally purchase a DRM-free song on the Internet. After taking my credit card number and particulars and after having selected the personalized version of the song I wanted, I was presented with this perfunctory message "There was a problem processing your purchase. Your credit card has not been charged – error code: 8". Well, error code: 8 prevented a most enthusiastic customer from attempting to purchase the song. If you wish to give it a whirl, here's the site where the song is supposed to be available.

In this interesting Engadget article, YouTube's fair use defenses are discussed in the context of an inevitable big media law suit alleging use of video clips infringes their copyrights. YouTube has been very conscientious about establishing copyright policies and removing infringing videos in their entirety, as required by the DMCA. For example YouTube quickly removed the Natalie Portman SNL video when NBC demanded this. But, the more interesting challenge will be when YouTube asserts that use of short video clips/snippets from big media sourced video (eg: a disputed penalty in a sporting event, the Janet Jackson wardrobe malfunction, a snippet from a David Letterman interview or top 10 list, etc.) is fair use under copyright law for educational, parody, commentary and/or criticism purposes. Assuming YouTube's current million-dollar-a-month burn rate doesn't take them down first, every fiber of my body tells me they are in for a fair use fight with broadcasters, organized sports and/or the MPAA at some point down the line.

The previous reports that Steve Jobs has won his long-running battle with the record industry over the pricing of songs in the iTunes Music Store are now confirmed. Record companies had argued for more flexible pricing, with newer songs going for a higher price, and catalog material selling for less.

Steve Jobs has apparently won his long-running battle with the record industry over the pricing of songs in the iTunes Music Store. Record companies had argued for more flexible pricing, with newer songs going for a higher price, and catalog material selling for less.